How Can the FTE Model Compete with the MSP Model?
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
@obsolesce said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
@obsolesce said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
All of them. I'm not clear what you are asking.
I think this is what we were all asking for:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
FTEs don't work floating hours, can't be shared with other companies, you can't get 10 people at 4 hours a week each instead of one at 40. You need one FTE for every "need" rather than the amount that you need for each task.
Some solid ACTUAL examples taking the MSP from = to >.
But it breaks the apples to apples comparison.
Basically, what I have gleaned from this thread that if all things are equal the value that an MSP brings over an FTE, if all things are equal, is ease of firing and greater potential for having a pool of knowledge to drawn on.
If all things are equal, then you are placing a restriction upon the MSP so that is is not allowed to be > an FTE. In that case, there is no difference what so ever in choosing one or the other.
But this is never the case. No company would ever restrict something from being better if it's possible without negative consequence.
So, MSP >= FTE... you choose the MSP every time .
@scottalanmiller is the one who requested the apples to apples comparison. I have been engaging him on his assumptions. However, the listing of benefits does not account for the negatives. There is a switching cost involved when you're utilizing a part time MSP, both in attention and response time. There is a variability to the quality of the work. As Scott stated earlier, having the rates equal for the MSP employee to their salary means no profit, so that is not equal in the majority of scenarios, etc.
Now I'm not saying that SWITCHING is worthwhile. That's not the same as saying that the grass isn't greener.
It's TOTALLY possible that the grass is greener on the MSP side, but only by the tiniest amount and not at all worth climbing the fence for.
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
Your original postulation appears to be that the FTE model cannot compete with the MSP model. If the value is the same there is no compelling reason to switch.
The value is always the same or better. I think you are working from a stance of "To not use an FTE you must not just make something else equal or better, but always much better" and that's flawed decision making.
In a case like this, you can't choose a de factor answer and an arbitrary "improvement over it" for something else to be better.
The value could be equal or better. There are bad MSPs just like there are bad FTEs.
That's why I explain the apples to apples. The MSP model is better, period. Not "could be".
A specific MSP might be better or worse than a specific employee. But the same people are better under MSP than under FTE. The model is without exception better.
I am not necessarily arguing the validity of the model, but rather the applicability.
It's always applicable because of this "fact"...
- There are good MSPs out there.
- There are bad MSPs out there.
- There are good FTEs out there.
- There are bad FTEs out there.
It comes down to good hiring in all cases equally. The ability to find a good MSP is much higher than to find a good FTE because of many factors. But everything that goes into finding a good FTE is available for MSPs and more. Everyone has the option of looking for a good MSP and getting one, it takes work but no more work than finding a good employee.
So I would say it is universally applicable.
Your model is reliant upon comparing an equal quality FTE to an equal quality MSP. The comparison breaks down if this cannot be obtained.
Well, for all intents and purposes, you can always get the same people. Not equal people alone, but the actual same people, either way.
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
Relationships are key to IT, and the difference between in person interactions compared to over the phone or via email/chat is marked. If all things are equal I would argue that a local FTE (able to get face to face with stakeholders without additional cost) is superior to a remote MSP.
I'll flip flop here.
I agree that relationships are key.
I'll disagree that local is better than remote all things equal.But key here is you are saying the local FTE is better than the remote MSP. Why did you choose that scenario, though? Why not state that a local MSP is better than a remote FTE? I feel like you are keeping the association of FTEs being also local, and MSPs always being remote.
In the case of an MSP, what does remote even mean?
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When is an MSP remote?
What makes you consider someone remote?
Is it where their mail goes?
Is it where their office is?
Which office, HQ or another one?
Is it where they are familiar with the territory?
Is it where they have staff?
Is it how far their staff is from you?
Is it if they can work inside your walls?Consider the same things for an FTE. What makes you define someone as local or not local? It's not as easy as you think.
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@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
Relationships are key to IT, and the difference between in person interactions compared to over the phone or via email/chat is marked. If all things are equal I would argue that a local FTE (able to get face to face with stakeholders without additional cost) is superior to a remote MSP.
I'll flip flop here.
I agree that relationships are key.
I'll disagree that local is better than remote all things equal.How does not being physically present improve relationships (unless things are toxic at one or the other, but that voids the model)?
But key here is you are saying the local FTE is better than the remote MSP. Why did you choose that scenario, though? Why not state that a local MSP is better than a remote FTE? I feel like you are keeping the association of FTEs being also local, and MSPs always being remote.
Because your examples for good MSPs are all remote, and the majority of companies where the "pool of knowledge" item favors MSPs tend to be regional if they even have multiple locations.
In the case of an MSP, what does remote even mean?
From my quoted post: "able to get face to face with stakeholders without additional cost"
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@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
When is an MSP remote?
What makes you consider someone remote?
Is it where their mail goes?
Is it where their office is?
Which office, HQ or another one?
Is it where they are familiar with the territory?
Is it where they have staff?
Is it how far their staff is from you?
Is it if they can work inside your walls?Consider the same things for an FTE. What makes you define someone as local or not local? It's not as easy as you think.
It is easy in the context of relationships. Can I get face to face with someone for minimal cost? That is local.
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
Relationships are key to IT, and the difference between in person interactions compared to over the phone or via email/chat is marked. If all things are equal I would argue that a local FTE (able to get face to face with stakeholders without additional cost) is superior to a remote MSP.
I'll flip flop here.
I agree that relationships are key.
I'll disagree that local is better than remote all things equal.How does not being physically present improve relationships (unless things are toxic at one or the other, but that voids the model)?
By allowing for other options, like not being tempted to waste time by being in proximity when not needed, not forcing resources to filter their willingness to work for you based on location, etc. Locality brings a lot of negatives to both parties. I don't disagree that face time can be great, if you have people who are good at face time which a lot of people are not.
But I feel that on average, it ends up a negative. Not a huge negative, not a pure negative, nothing like that. Just I think that people who enjoy face time (which I am one of) tend to prioritize that stuff because it "feels good" and forget to look at if it helps the company's bottom line.
We did this at the big Wall St. bank. They had to pay far more for staff, tons in real estate costs, and lost insane amounts of productivity staffing nearly twice as many people as they should have, all because they prioritized face time over profits.
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
It is easy in the context of relationships. Can I get face to face with someone for minimal cost? That is local.
My customers across the country get that with us. They couldn't get people who "lived locally" for the same cost overall (all things considered.) But they throw a retirement party, we pop in just to go drink with them. Sure, 1000 miles away (literally) but it's the full picture that matters.
Are we local or not local? We get face time, it's not expensive. But we don't live locally.
Just one example, but it's complex.
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Take another example, lots of companies considered us remote because of where our mail drop was (NY) and ignored the fact that most of us literally lived down the street (in TX.) To them, local had nothing to do with where the people were or that we'd run into each other at Walmart. Their idea of local seemed pretty weird to me.
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@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
It is easy in the context of relationships. Can I get face to face with someone for minimal cost? That is local.
My customers across the country get that with us. They couldn't get people who "lived locally" for the same cost overall (all things considered.) But they throw a retirement party, we pop in just to go drink with them. Sure, 1000 miles away (literally) but it's the full picture that matters.
Are we local or not local? We get face time, it's not expensive. But we don't live locally.
Just one example, but it's complex.
Not expensive? Compared to an FTE it is horribly expensive. Maybe not directly for the company, but the MSP has to recoup the costs of time and travel somehow, and that will affect rates if you're going to stay profitable.
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Here is another local question....
If you have an MSP model (pool, lots of people) and one or two of them are in the office daily, what percentage of the pool needs to be face to face to be local? What if the company is next door, but you never see the people?
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
@scottalanmiller said in How Can the FTE Model Compete with the MSP Model?:
@kelly said in How Can the FTE Model Compete with the MSP Model?:
It is easy in the context of relationships. Can I get face to face with someone for minimal cost? That is local.
My customers across the country get that with us. They couldn't get people who "lived locally" for the same cost overall (all things considered.) But they throw a retirement party, we pop in just to go drink with them. Sure, 1000 miles away (literally) but it's the full picture that matters.
Are we local or not local? We get face time, it's not expensive. But we don't live locally.
Just one example, but it's complex.
Not expensive? Compared to an FTE it is horribly expensive.
We can prove that it is not.
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@kelly said in How Can the FTE Model Compete with the MSP Model?:
Maybe not directly for the company, but the MSP has to recoup the costs of time and travel somehow, and that will affect rates if you're going to stay profitable.
That is very true, no denying that. But you can build those costs in. There are certainly costs involved, but there are savings too. You have to look at the whole picture.
In this example, we have housing costs about 20% lower than they do, our fuel is way cheaper ($.25 I bet), and our Internet is a fraction of the cost (about 10% the cost, I kid you not.) Going local to them would require us to raise prices, traveling to them is trivial.
